IRS funding has become a ‘self-fulfilling prophecy’ – By Jessie Bur (Federal Times) / July 14 2021
The IRS lacks the workforce and infrastructure to pursue high-value tax enforcement, but this resource problem also reinforces to the IRS workforce and to Congress that low-value tax enforcement is the greater problem in what Chad Hooper, executive director of the Professional Managers Association, calls a “self-fulfilling prophecy.”
“The IRS’s embedded culture has become to focus these examinations on easier and less complex returns, and that does mean lower- or middle-income earners, rather than wealthier individuals,” Hooper said in a July 14 briefing on the proposed IRS budget hosting by his organization. “That culture is reinforced by congressional action and inquiry because we see that play out in the way that Congress talks about the earned income tax credit and mitigating improper payments for these lucrative social safety net programs.
“That leads the IRS to prioritize a very rigid enforcement across that population of taxpayers. But it’s a zero-sum game. If we’re doing that, then that means those funds are not being spent on more financially complex investigations, which may be longer term, they may require more staff and a lot more expertise to come to a conclusion.”
The lack of resources at the IRS has long been a problem for the agency, but it has recently entered the spotlight following Biden administration proposals to increase agency funding in both a proposed infrastructure bill and in annual budget legislation.
